Needham Sees GitLab Increasingly Becoming Center Of Gravity For Organizational Software Innovation

Needham analyst Mike Cikos initiated coverage on GitLab Inc GTLB with a Buy rating with a price target of $70 (21% upside).
GitLab delivers a single application to drive cross-function collaboration and improve customer efficiencies for Application Development processes, Cikos noted.
He believes GitLab is increasingly becoming the center of gravity for organizations' software innovation, where GitLab's DevOps Platform benefits from its dual-flywheel development strategy.
Notably, the company's more than $40 billion TAM is predominantly Greenfield and competes against DIY tools.
Its nearest competitor Microsoft Inc's MSFT GitHub, is present in less than 20% of deals where GitLab competes, and GitLab's win rates are consistent irrespective of GitHub's presence.
He views rapid innovation and the frictionless go-to-market as two pillars that can sustain GitLab's growth in an underpenetrated market.
He believes the market's adoption of a Platform, GitLab's maturing platform, and the growing shift toward DevSecOps where Security is embedded in DevOps all feature prominently in supporting the uptake of GitLab's Ultimate Tier.
He also sees the potential for GitLab to create value by creating new tiers/packages, potentially increasing platform monetization over time.
Price Action: GTLB shares traded higher by 3.02% at $57.70 on the last check Thursday.